Germany's Tarnished Credit Rating - Finance - Global Economic ...

Moody?s put Germany on notice Monday as the outlook on Germany?s Aaa rating was changed from ?stable? to ?negative.?? Even worse news would be if the announcement is followed by a full downgrade in the near future.? Moody?s also revised the outlooks on the credit ratings of the Netherlands and Luxembourg to ?negative.?

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From CNNMoney (July 24, 2012):

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Moody's said the revisions for the three countries were prompted by "the rising uncertainty regarding the outcome of the euro area debt crisis" and the "increasing likelihood that greater collective support for other euro area sovereigns, most notably Spain and Italy, will be required."

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The possibility of a Greek exit from the euro, Moody's said, could threaten banks throughout the eurozone. German banks also have significant exposure to other struggling countries on the continent, particularly Italy and Spain, the agency added.

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Even if the monetary union remains intact, Moody's said Germany, as the eurozone's largest economy, will likely bear an increased financial burden as further bailout funds are required.

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For discussion:

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1.????? What impact would a credit downgrade have on Germany?

2.????? What impact would a German credit downgrade have on other Eurozone economies?

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Source: http://community.cengage.com/GECResource/blogs/finance/archive/2012/07/26/germany-s-tarnished-credit-rating.aspx

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